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Skills are the new currency in HR. Gone are the days when organizations could solely base their HR decision-making on cost, headcount and role titles. What forces of change drive the skills agenda? How can a more joined-up HR approach help organizations upskill and reskill the workforce rapidly and at scale? Where does skills management software fit in the equation?

In this blog, Sven Elbert, Senior Analyst at Fosway Group, will explore the answers to these questions by explaining:

  • Why skills drive organizational transformation and why HR teams need to transform the workforce with a focus on skills.
  • The strategic importance of skills as a catalyst to organizational change.
  • How skills affect all areas of talent, from recruiting to onboarding to learning and performance management.
  • Why skills management software is key to putting in place a consistent skills-based approach.

Why Skills Are at the Heart of Organizational Transformation

Currently, organizational transformation is driven by pressing trends, including digitization, automation, artificial intelligence (AI) and decarbonization. For 65 percent of organizations, this leads to significant skills gaps. Stories of companies such as Kodak remind us of how digital innovation can disrupt entire businesses and how leaders need a forward-looking vision and the right skills in their workforce to bring that vision to life.

The results from a Fosway report showcasing that 65% of organizations think they have a significant skills gap.

Whereas digitization is often about challenging the status quo and doing things more effectively, automation aims to do tasks more efficiently. This technology, paired with robotics and AI, is already transforming many core value-creating processes for low-skill, low-wage work. In fact, Goldman Sachs says two-thirds of jobs could be automated, at least to some degree.

But now, AI is also revolutionizing knowledge work, with many organizations increasingly turning to it for decision-making and forecasting. As a result, humans need to build new skills, including those related to database modeling and data processing, to stay employed.

This is why employers are increasingly looking to develop these skills internally, as recruiting them in today’s competitive labor market presents a significant challenge.

Meanwhile, with many participants in the Energy & Resources (E&R) industry declaring their intention to become carbon neutral by 2050, decarbonization is only just gaining momentum. As new governmental policies to fight climate change place substantial external pressure, organizations need to rethink their skills agenda to remain compliant and keep up.

Evidently, the modern organizational transformation and agility agendas are centered around skills. They are at the heart of every issue – whether reskilling and upskilling to tackle environmental challenges, leveraging automation and AI-savvy workers to stay ahead of the curve, or filling skill gaps to maintain productivity by distributing work via an internal talent marketplace and matching qualified candidates to temporary gigs, projects and roles.

The Strategic Importance of Skills

To overcome the challenges listed above, HR needs to clearly understand the existing skills within the organization and those required in the future. Otherwise, identifying current and future gaps and creating a strategy to proactively close them is mere guesswork.

This isn’t something to take lightly, as a lack of skills often prevents organizations from taking advantage of new market opportunities, delivering new products and services and adapting to change. Ultimately, skills gaps can hinder business growth and put the organization’s survival at risk.

It is easy to assume that organizations would proactively manage skills to address the problem. However, research indicates that less than half (45 percent) think they understand the skills profile of their organization adequately.

Actually, one in five organizations admits to having no skills agenda, and almost 90 percent said the immaturity of their approach to supporting skills makes it harder to retain their best people.

Why Skills Management Software Affects All Areas of Talent and HR

The results from a Fosway report showcasing that 45% of organizations understand the skills profile of their organization.

If you don’t know what skills you have within your workforce or where they sit, how can you know where to invest in or which people you need? Knowing who has what skills is a prerequisite for matching them to opportunities and identifying strategic skills gaps.

Having agreed definitions for skills, organizing them into a skills framework and accurately assessing employees’ skills at scale are often seen as complicated and laborious tasks. This may explain why 60 percent of organizations do not have a consistent approach to skills across their HR silos.

The challenge here is to track the types of tasks employees are undertaking and how they apply workplace skills. By doing this, HR can start to understand who has what skills.

However, tracking these tasks using legacy and siloed HR systems will not provide the insights needed to gain skills visibility and scale their development. That’s where next-generation skills management software powered by automation and machine learning comes into play.

Skills management software can support a consistent approach to skills development across the organization, enabling employers to map which skills are being used and which are needed. As a next step, this technology can support suggesting personalized work and learning opportunities, helping build comprehensive learning paths, fill skills gaps and promote internal mobility.

The results from a Fosway report showcasing that 60% of organizations don't have a consistent skills framework.

This consistency is critical, particularly when looking at how influential skills are to people and business success. The way we connect skills across all areas of HR and talent acquisition and management matters.

Whether that is through hiring, onboarding, learning, internal mobility or performance management, building a clear understanding of the organization’s skills landscape can strengthen its readiness for change and ability to adapt.

That’s why HR needs a joined-up approach, which can be more easily built if skills management software is deployed to provide skills visibility from end to end. After all, HR and its solutions are bridges between people, skills, development opportunities and work. As such, it’s easy to visualize how any breaks in the bridges can affect the employee’s journey and experience.

Without connecting skills and skills development to new opportunities and learning, organizations make employees’ development more difficult and risk not being prepared for evolving business demands. A transformative skills strategy must ensure that skills and opportunities connect seamlessly and consistently across the organization and the talent journey.

If you are looking to build your talent programs around skills and want to find out more, our free playbook is a great resource.


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